Introduction to Macroeconomics

Welcome to ECON 2002AED Introduction to Macroeconomics.

This course is a one-semester, three-credit-unit, 2000-level course for HKMU students seeking one of the following degrees:

• Bachelor of Social Sciences with Honours in Economics (BSSECONH)
• Bachelor of Social Sciences in Economics (BSSECON)

The 2000-level number in the course code indicates ECON 2002AED Introduction to Macroeconomics is a middle-level course, yet there is no specific prerequisite for enrolment. The aim is to provide you with knowledge about the macroeconomy that is essential for understanding the outcomes of interactions between different groups of people and sectors in society.

The study units, textbook, assignments and self-tests will help you master the topics over a period of around 16 weeks.

Purpose of this Course Guide

As this course might be the first course that you have taken at Hong Kong Metropolitan University (HKMU), you might not be aware of the study skills required and how HKMU courses are organized. If you have taken one before, then you should be well aware of both the skills required and the course organization. Whichever group you belong to, it is recommended that you read this Course Guide thoroughly before looking at the study units or your textbook.

This Course Guide tells you briefly what this course is about, and how you can work your way through the course materials. It suggests the amount of time you will likely need to complete the course, and it gives you a general idea of when your assignments are due. For detailed information on assignments, however, please refer to the Assignment File, and for information concerning due dates for the submission of work, please refer to the Presentation Schedule. Both will be made available on the University's Online Learning Environment in due course.

The study units for ECON 2002AED have been prepared by your university professor. You can read and work through these specially designed study materials at your own pace at times and places that suit you best.

You can think of working through each study unit as reading your lectures instead of hearing them from a lecturer. But in the same way that a lecturer might set you some reading to do, the study units will tell you when to read your textbook or other materials.

In the same way that a lecturer may give you an in-class exercise, your study units will also provide exercises (i.e. self-tests and activities) for you to do at appropriate points. You should do your best to complete them all, as these exercises and questions give you the practice necessary to achieve the objectives of the course and pass the examination. Finally, just as you 'make notes' in a direct face-to-face lecture, you are advised to take notes as you work through the study units and your textbook, and to read and think about them in relation to each other.

Course aims

This course aims to introduce you to the problems of macroeconomics, and to enable you to explore the ways in which private and government agents deal with these problems. It will cover macroeconomic indicators, the nature of macroeconomic problems, and macroeconomic policy.

Course learning outcomes

Upon completion of ECON 2002AED, you should be able to:

• explain national income accounting, and apply this framework to measure economic activity in the macroeconomy;
• analyse the long-run performance of the aggregate economy, and discuss the role played by the monetary system;
• explain the key business cycle factors related to short-run economic fluctuations; and
• discuss macroeconomic stabilization policies.

Course description

ECON 2002AED Introduction to Macroeconomics has been designed to create a structured yet stimulating environment in which you will learn the fundamental concepts of this fascinating subject. The course includes the topics presented in the 'Course overview' table below, which is followed by brief descriptions of each unit in the section 'Study units'.

Course overview

The following chart gives a general overview of the course structure.

Study units

There are five study units for this course. The discussions and topics start by first defining and measuring basic macroeconomic variables, to analysing what happens to the macroeconomy in the long run, then to introducing models that attempt to explain fluctuations in the short run, and finally to an extension to the international economy. Generally, units start by introducing and explaining some macroeconomic variables. The next step is then to look at some theories that attempt to explain their movements.

You have a well-written textbook — Mankiw, Quah and Wilson's Principles of Economics: Asian edition (3rd edition) — as the basis for your studies in this course. The following units are based on groups of chapters from this excellent resource.

Unit 1   What is macroeconomics?

This introductory unit explains how the economy as a whole works. It introduces some well-known observations economists have made in the past about the macroeconomy. When studying other units, what you've learned in Unit 1 will give you a better idea of the general picture of the economy that different models try to explain.

Unit 2   The data of macroeconomics

This unit seeks to consider two fundamental macroeconomic questions that concern individuals — the level of income one can earn, and the general prices of goods and services in an economy. The first part of this unit defines what is meant by income and expenditure and their equivalence in an economy. The different measurements of gross domestic product (GDP) are considered. Then the relationship between the magnitude of GDP and economic well-being is explored. The second part of the unit deals with methods of measuring the general level of prices, and discusses problems in using these price indices to measure the cost of living.

Unit 3   The real economy in the long run

After you've learned about methods to count production and prices in an economy, this unit focusses on looking at real production in the long run. First, the basic elements of economic growth are identified. Then variations in the level of development between different economies across long periods are considered, and a model of savings and investment is used in an attempt to explore the underlying causes of such discrepancies. Policies to reduce such gaps are also briefly discussed. The last part of this unit looks into the nature of unemployment and policies aimed at reducing its impact.

Unit 4   Money and prices in the long run

This unit moves from the real economy, i.e. the production of goods, to the monetary sector. The main aim is to look into how the monetary system works to facilitate economic activity, through the interactions between the central bank and the banking system. The next part of the unit moves on to look at some long-run theories on the nexus between the quantity of money in circulation and inflation in the economy.

Unit 5   Short-run economic fluctuations

In this unit, the focus is on the study of deviations from economic outcomes predicted by the long-run economic theories you learned about in Units 3 and 4. The concept of short- versus long-run is defined in the context of the aggregate demand and aggregate supply (AD–AS) model. The short-run variations in economic activity and their adjustment back to equilibrium in the long-run is then explained.

The AD–AS framework is then used to look at potential policy levers that can be used by authorities to correct short-run recessionary and expansionary tendencies. The tools of fiscal and monetary policies are analysed, and potential pitfalls in using them are explored.

The last part of this unit introduces the Phillips curve framework to link short-run economic fluctuations with the trade-off between unemployment and inflation. Using this framework, the costs of a reduction in long-run inflation are evaluated.

Print media

Textbook

There is one compulsory textbook for ECON 2002AED:

Mankiw, N G, Quah, E and Wilson, P (2021) Principles of Economics: An Asian Edition, 3rd edn, Cengage Learning.

This well-established introductory textbook is provided by HKMU to all students of the course.

Readings

The textbook illustrates basic concepts and principles very well. A number of readings from journals, reports from local/international institutions, and case studies will also be used to provide you with the necessary knowledge of the issues at hand.

Non-print media

Online Learning Environment (OLE)

A dedicated area for ECON 2002AED students has been set up on the HKMU's OLE. You will be able to log on to the OLE to access the course discussion board, e-versions of the course study units and other materials. You will also submit your assignments via the OLE.

Equipment needs

You should have a computer (PC) that meets the minimum hardware and software requirements needed to gain access to the Internet.

Assignment File

Assignment details for this course are contained in your Assignment File. The nature of these assignments is described in the 'Assignments' section of this Course Guide. You are required to complete your assignments and submit them via the Online Learning Environment (OLE) in accordance with the timetable provided in the Presentation Schedule.

Presentation Schedule

The Presentation Schedule is available on the OLE. It gives the dates for completing assignments, and attending tutorials, and so on.

You should pay particular attention to this Course Guide and all instructions in the study units. You should attend all your tutorials, where you will meet your tutor and fellow learners.

Study units

Please read the study units carefully as they guide your learning and tell you how to approach any assignment related to the unit. Otherwise, you may miss important information. You must read both the study units and the textbook — they are not alternatives. Moreover, you should also read articles in the news and journals and other books related to the course topics. The more widely you read, the better your appreciation and understanding of the course will be.

Each unit is divided into a number of sections. The first section provides the objectives of the unit, and introduces the materials to be covered. The next section constitutes the contents of the unit. This section will guide your learning and direct you to complete the self-tests. The final section contains a summary of the unit and feedback on the self-tests.

Non-assessed self-tests

You will come across non-assessed self-tests in each of the study units. These are designed to help you remember and apply what you have learned and to prepare for your assignments and the examination. The self-tests provide you with immediate feedback on your understanding of the subject matters just learned. By answering the self-test questions and referring to the feedback (included at the end of every unit), you can check your progress accordingly. You should attempt all questions before referring to the answers.

Checking understanding

While you are studying each unit, please keep in mind the unit's objectives. After you have finished the unit, please check whether you have achieved the set objectives. If you encounter any problems, please make notes and raise these with your tutor as soon as possible.

This course is designed to assist learners to move easily from the stated objectives, through the required readings in the text and supplementary materials to the assignments and examination. You are expected to apply concepts and techniques you have acquired during the course when completing assignments and case studies; you will also undertake short practice exercises while working your way through the textbooks and study units.

The study units will include self-assessment exercises that allow you to develop and monitor your own progress. The formal assessment requirements of the course will include two assignments and one final examination. Assignments serve as continuous assessment within the study period, and contribute 50% of the total course mark. The other 50% is evaluated through the final examination.

You are required to achieve at least 40% or above on the average of assignment scores, and 40% or above in the final examination in order to obtain a pass in this course.

Assignments

During the 16-week period of distance learning for this course, the submission of two assignments serves three purposes:

1. to provide a mechanism for you to keep up your progress;
2. to test your understanding of the topics and require you to demonstrate your achievement of the objectives of each unit; and
3. to also provide you with an opportunity to apply what you have learned by completing some application work and case studies.

Assignments, after being marked by your assigned tutor, are returned to you so that you are aware of your mistakes and can clarify any misunderstandings. In addition, you can also widen your perspectives through your tutor's feedback.

Assignments generally consist of short problem-solving questions. There are two assignments for the course, and both of them will be counted towards the final assessment:

• Assignment 1, worth 25%, evaluates materials contained in Units 1, 2 and 3; and
• Assignment 2, worth 25%, evaluates materials contained in Units 4 and 5.

How to do your assignments

For each assignment, please read through the question and the instructions that accompany the question in the Assignment File. Please read the question carefully and make sure you understand what is required before attempting to answer.

Once you have completed each assignment, you must submit it via the OLE. Please ensure you do this on or before the deadline. However, if you cannot finish your assignment on time, you must contact your tutor before the deadline to discuss the possibility of an extension. Your tutor may grant you an extension of up to seven days. If more time is needed, you must obtain approval from the Course Coordinator or the Dean of the School of Arts and Social Sciences. No mark will be awarded for any late assignment without prior approval obtained from the Course Coordinator or the Dean.

Assignments will not be marked after the deadline for the final assignment, unless prior approval has been obtained for submitting them late. students as it does to authors of books. However, you may include parenthetical references to the works you cite e.g. (Mankiw, Quah and Wilson, 2021, p. 34). If you make such references, you should include a section at the end of your assignment called 'References' where the full name, title, date, and place of the publications appear. The way to cite a reference is:

Mankiw, N G, Quah, E and Wilson, P (2021) Principles of Economics: An Asian Edition, 3rd edn, Cengage Learning.

Note that the table in the 'Course overview' section, shown earlier in this Course Guide, gives you an indication when your assignments are due, but for actual dates please check your Presentation Schedule and the Assignment File.

For further information about the procedures for submitting assignments via the OLE, please see the item 'General Information' under 'Assignment Files' on the OLE.

University position on ChatGPT and other AI chatbots

HKMU values all learning tools that help our students excel academically. We recognize that ChatGPT, along with other AI chatbots, is one such tool that can provide students with quick and easy access to information. As fairness, integrity, perseverance and innovation are the four core values of our university, we encourage our students to use ChatGPT wisely and responsibly, in conjunction with other tools and resources such as the library, peers, tutors, and professors.

Students have always been reminded about proper referencing, academic integrity, accuracy, and the importance of verifying sources. We recognize the convenience of ChatGPT and understand that artificial intelligence is here to stay. However, we also believe that students need to take ownership of their work, including their learning. While ChatGPT can be a useful tool, it should not be relied upon solely to complete assignments. Instead, students should embrace and harness ChatGPT, or similar tools, like they would use a calculator or an encyclopedia, as a supplement to their coursework and to deepen their understanding of what they are trying to learn.

For more information on the University's position on ChatGPT and other AI chatbots, please visit https://ole.hkmu.edu.hk/ChatGPT/index.html.

Assignment extension policy

The assignment policy of the University as stated in the Student Handbook should be observed. Applications for extension of up to seven days should be submitted to your tutor. For extensions of over seven days, you should note the following:

1. Assignment extensions may be granted in extenuating circumstances, which should be interpreted as circumstances that are unexpected. Work commitments and travelling are not regarded as extenuating circumstances unless they are unexpected.
2. Supporting documents must be submitted along with the application for extension of over seven days to justify the claim. Applications without supporting documents will not be considered.
3. Applications for extension should be submitted either before or on the due date.
4. The decision to grant or refuse an extension is made by:
   • the Course Coordinator for extensions of up to 21 days; or
   • the Dean for extensions of over 21 days.

If the assignment is posted to the tutor, it is the responsibility of the student to check with his/her tutor that the assignment has successfully arrived. Extension applications without supporting documents on the ground of postal loss will not be accepted. The University cannot accept any responsibility for assignments that are not received by your tutor due to problems with the post. As a precaution, you are advised to keep a copy of each assignment you submit and obtain a certificate of posting from the post office when you post your assignment.

Examination

The final examination accounts for 50% of the total course marks. It will be held at the end of the course, and is scheduled to be two hours long. It will contain short problem-solving questions, and covers materials from all units.

Final examination and grading

The final examination for this course will be two hours long (closed book) and counts for 50% of the total course grade. You should use the time between finishing the last unit and taking the examination to review the entire course. You might find it useful to review your self-tests, your assignments, and the tutor's comments on your assignments before sitting for the examination.

The final examination covers information from all parts of the course and will be in a form you have already experienced in self-tests and assignments. Do not worry that the examination will contain tricky questions. That would not be consistent with the clear, open approach HKMU takes to helping its learners succeed in their studies.

To earn a pass grade for the course, an overall mark of 40% or better is required, but you must attain an average mark of 40% or better on the assignments and a mark of 40% or better on the final examination. You are therefore required to submit all assignments and to sit for the examination. If, for some good reason, you are not able to complete all assignments or sit for the examination, contact your Course Coordinator to see if alternative arrangements can be made.

Tutors

Tutors conduct face-to-face non-compulsory tutorial sessions with a group of students over the course presentation as per the tutorial schedule. At these sessions, key course concepts are reviewed and reinforced; group and individual exercises are conducted; topical issues are discussed; individual student questions are answered; and assistance to assignments may also be provided.

Tutors also make themselves available for online contact with their tutor groups. In addition to the tutorial work and online tutoring, tutors mark student assignments according to marking criteria provided by the Course Coordinator. Tutors are encouraged to provide comprehensive and timely feedback to students. The Course Coordinator is responsible for training the tutors, providing marking criteria, monitoring a sample of marked assignments and providing feedback to tutors.

Tutors are required to start tutorial sessions on time. If a tutor fails to turn up 30 minutes after the scheduled starting time, students may assume that the session is cancelled and they should report the case to the Course Coordinator so that a make-up session can be arranged.

Tutorials

Twelve hours of tutorial will be provided for students of ECON 2002AED Introduction to Macroeconomics. Tutorials are not compulsory, but you are strongly recommended to attend them.

You are encouraged to put into practice the following strategy for working through the course:

1. Read this Course Guide carefully. Check the suggested study schedule and mark down important dates, such as the assignment due dates and tutorial dates. Try to keep up with the schedule and meet these important dates.
2. Start the first study unit. Read the introduction and objectives of the unit. The objectives indicate the main topics and expectations for the unit.
3. Work through the unit. The unit embodies a suggested sequence of study, but you can revise it to suit your own judgement and strategy.
4. Read the textbook and supplementary readings whenever the unit suggests you do so.
5. Attempt the exercises at the end of each section, and then check the answers given at the end of the unit, and read the discussions of the exercises.
6. Review the objectives of the unit to confirm that you have achieved them. Review the study materials and/or talk to your tutor if you are not sure that you have met the expectations.
7. Turn to your Assignment File and complete the assignments according to the instructions in the unit. Submit your work no later than the due dates.
8. After you have turned in your assignments, do not wait. Start working on the next unit. Note that only in this way can you be on schedule.
9. After your assignments have been marked and returned to you, read through them and pay particular attention to your tutor’s comments and queries. Clarify any doubts immediately by phoning or emailing your tutor.
10. After completing the last unit, review the whole course and prepare yourself for the final examination. Check again that you have met the course objectives and unit objectives.

You need to be regular in your study, because only in this way can you keep what you have learned fresh in your mind, and stay on schedule. Note that time is tight, but that time is in your own hands! You also need to be active in thinking, and always ask ‘Why?’ The exercises in the units will stimulate your thinking, but you also need to challenge yourself to further your understanding of the logic underneath the study materials.

This course has been designed to introduce you to the basic concepts and theories of macroeconomics so that you can make sense of the many economic and financial news headlines you see every day. It will help you understand the world in which you live, and give you a better idea of the links between different parts of the economy, and the many different roles you play in it.

After taking the course, we hope that you can conduct some basic analysis of the macroeconomy. For example, what are the limits and potential conflicts of different macroeconomic policies? What sort of time frame should we be looking at when it is said that some macroeconomic trends are happening now? How should we make sense of the many announcements made about economic data, and how do we know whether these announcements actually improve our understanding of the current macroeconomic climate?

We hope you enjoy studying macroeconomics and find it useful in your daily life. You may find some units of the course easy, but others will be difficult and challenging. Although you have to depend on yourself to work through the course, assistance from the HKMU is always available, and your tutor is ready to help.

We wish you every success!